The Tide Is Turning

  • The world economy is experiencing a synchronized upturn, but the main areas are already tightening monetary policy, or about to do so.
  • This will reduce world liquidity and provide a headwind for equities to run higher, depending on the pace of it.
  • However, the biggest risk is that US monetary conditions tighten much faster than elsewhere.
  • This would put upward pressure on the dollar and reverberate throughout the world financial system causing the drying up of liquidity, as the BIS has explained.

Source: The Tide Is Turning | Seeking Alpha